Chantell Sackett purchased a 0.63-acre property in Priest Lake, Idaho, for her husband, Michael, in 2007 so they could build a vacation home. Once the couple began clearing the property, officials from the EPA and U.S. Army Corps of Engineers showed up to ask if the Sacketts had a permit to fill in wetlands. Seven months later, the agency sent the Sacketts a compliance order requiring them to restore the property to its original condition. The order also imposed penalties of $37,500 per day for each day of noncompliance. The Sacketts disputed the order, arguing that the property was a subdivision, not a wetland.

The couple filed suit in the U.S. District Court for the District of Idaho to challenge the order, but their lawsuit was dismissed for failure to state a claim. Judge Edward J. Lodge held that the plaintiffs could not bring an action against the agency until it filed an enforcement action against them. The Ninth Circuit U.S. Court of Appeals affirmed. The high court granted the Sacketts' petition for certiorari in February.

Damien M. Schiff of the Pacific Legal Foundation in Sacramento, Calif., who represents the Sacketts, explained that the high court should view the EPA's compliance order as a final agency action that is subject to review under the APA. Schiff noted that the Sacketts are subject to double liability as a result of the compliance order in that they face penalties of $37,500 per day for violating the order and $37,500 per day for being in violation of the CWA. Schiff also stated that the compliance order makes it difficult for the couple to apply for an "after-the-fact" permit from the Army Corps of Engineers.

Chief Justice John G. Roberts Jr. then asked if the amount of the penalties was the main reason the plaintiffs sought review of the compliance order. Schiff conceded that the penalty amounts played a role in the plaintiffs' challenge but said the fact remains that the Sacketts cannot independently initiate a review of the compliance order.

Chief Justice Roberts and Justices Antonin Scalia and Elena Kagan then asked Schiff why the Sacketts did not go to the Army Corps of Engineers for a permit so it could determine if the property was a wetland. Schiff answered that regardless of whether the Army Corps of Engineers found that the area was not a protected wetland, the Sacketts would still be subject to the EPA's compliance order.

Justice Ruth Bader Ginsberg then questioned Schiff as to what kind of review the compliance order would be subject to if it could be challenged under the APA. Schiff answered that the arbitrary and capricious standard could be used, as well as evidence the EPA used in making its determination that a violation had occurred. Schiff also explained that although it could still be difficult to be successful in challenging the order under the arbitrary and capricious standard, the Sacketts should not be prevented from seeking review of the order.

"I mean, as it stands now, they have been told you cannot build your home, you must now convert your property into wetlands, and you are being charged $37,500 per day if you don't immediately comply; and yet you get no day in court?" Schiff said.

Schiff concluded by stating that even if a review was allowed and the Sacketts' property was found to be a wetland, there would still be a question as to whether there was a nexus between the proposed construction and a discharge of waste in violation of the CWA.

Malcolm L. Stewart of the Solicitor General's Office in Washington argued on behalf of the agency and found nothing wrong with the fines imposed by the compliance order. Chief Justice Roberts asked Stewart what he would do if put in the same situation as the Sacketts.

"I think at that stage your options would be limited," Stewart answered. "You could apply for an after-the-fact permit . . . or you could simply comply with the compliance order at the cost of, it's been estimated $27,000. Once the compliance order has been resolved, there would be no further impediment."

"That's what you would do?" Chief Justice Roberts responded. "You would say, I don't think there are wetlands on my property but EPA does, so I'm going to take out all the fill, I'm going to plant herbaceous trees or whatever it is, and . . . I'll just do what the government tells me I should do."

Stewart explained that the issuance of a compliance order is not necessarily the EPA's first line of defense and argued that a compliance order is not a final agency action. Steward said that the agency could issue a warning rather than a compliance order but that the warning would not be subject to review.

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